Horses and the Law
Buying & Selling Your Horse
By Jim Ritchie, Ritchie & Associates, LLC (Buying: Second of a two-part series on the legal aspects of buying and selling horses)
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ery early on a cold Christmas morning when I was 8 years old, I awoke excitedly and yelled to my little sister “get up!” We both bounded down the stairs to see what treasures we might find under the tree. Hanging on a low branch was a soot-smudged card that read: “Jimmy, go look in the field. Love, Santa.” I grabbed my boots, ran out the back door and took off for the barn. There in the snowy pasture was my first pony, a Breyers®-worthy Pony of the Americas in a red blanket. It was magical and I appreciate it all the more now that I know what my parents (and Santa) had to deal with to get that pony to our farm that Christmas. This month we explore legal issues and recommended practices when purchasing a horse at Christmas or any other time. I will stay away – for the most part – from how to select the horse or pony that is right for you. There is already a ton of advice online, in books and articles, and wherever two or more horse folks are gathered, about how to evaluate and find your next horse. As an equine attorney who works with buyers and sellers in putting deals together and resolving disputes, I have only two cardinal points on the subject: 1) if you are a rookie buyer, find a trusted horseman or professional to guide you and be realistic about your skills, goals and budget; and, 2) all buyers should avoid the impulsive, emotionally-driven purchase. Buying a horse is a deceptively complex transaction. On the surface, it is pretty straightforward. You select the horse, agree on a price and payment terms, and take the horse home. In reality, to have successful outcomes buyers need to address several important issues to protect their legal interests and their wallet. Remember, when purchasing a horse, it is a “buyer beware” situation. Unless you put terms in a written purchase agreement that protects you, the law provides very few remedies for problems that arise after a sale. Let’s look at the best practices and key considerations that buyers need to tackle when purchasing a horse. Require a Written Agreement and Bill of Sale. The best way a buyer can shape the transaction to meet her needs is to prepare a clear and detailed purchase agreement. The essential terms for an enforceable agreement include the parties to the sale, the sales price, financing, a description of the horse, health disclosures, representations and warranties, risk of loss before the deal closes, date of delivery, remedies in the event of a dispute, and a Bill of Sale. A prudent buyer should also require a trial period before finalizing the purchase. It seems obvious, but during the trial period, have the horse perform its intended job. If you are going to hunt with the horse, take him out on a hunt. The same goes for barrel racers, trail horses, and show ponies. I am often surprised by buyers who put a trial period in their agreement, but fail to have the horse actually perform its discipline. It is hard to unwind a transaction on the basis that the horse is not fit for its intended purpose, if the buyer did not test its suitability when she had the opportunity. A buyer should also insist on a separate Bill of Sale when purchasing the horse. The Bill of Sale will recite the essential terms of the transaction, but it should also include provisions that the seller owns the horse “free and clear” of any liens, claims or other encumbrances. That will help protect a buyer from claims by a seller’s creditors should a dispute arise. Disclosures, Representations and Warranties. Purchasers should include terms that compel a seller to disclose the full medical history of the horse and enable the buyer to contact the treating vet to secure all records. If a seller is unwilling to provide that information, it is a red flag that something is not right.
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The Aiken Horse
The seller’s representations should include the horse’s age, capabilities, experience, breeding (if relevant), temperament and soundness. These attributes are central considerations to any purchase and the buyer should require these points in the written agreement. Warranties in a sales agreement are important and can be a point of conflict. A seller will likely seek to disclaim any warranty and have the buyer purchase the horse “as is.” Under those terms, a buyer accepts the horse with all its faults. Unless there is evidence of fraud or misrepresentation, a post-sale claim against the seller based on inadequate quality or value will not be successful. Therefore, a buyer should insist on warranty language that establishes that the horse is able to perform its intended job at the owner’s required level and other reasonable standards. Pre-purchase Exam. The agreement should include a provision that the purchase is conditioned on the horse undergoing a pre-purchase exam by a vet of the buyer’s choice. The scope of the exam should be commensurate with the investment being made by the buyer, the age and background of the horse, and its intended use. If the buyer is
October-November 2020
